Topcoder Case

9-610-032

JANUARY 15, 2010

KARIM R. LAKHANI

DAVID A. GARVIN

ERIC LONSTEIN

Top

pCoder (A): D

r

Develop

ping So

oftware throug

e

gh

Cro

owdsou

urcing

2

ughes, CEO and founder of TopCode Inc., enter

r

er

red his comp

pany’s

In December 2009, Jack Hu

quarters in Glastonbury, Connecticu eager to review a p

,

ut,

particularly c

complex sof

ftware

headq

development proje for an ene

ect

ergy firm’s dy

ynamic powe pricing syst

er

tem. Eight ye

ears after foun

nding

es

yed detailed project reviews. He wa particularl proud tha his

as

ly

at

TopCoder, Hughe still enjoy

roduce high-q

quality softwa solutions for which hi own emplo

are

is

oyees did not have

t

company could pr

rite

ine

Instead, the f

firm nurtured a global com

d

mmunity of m

more than 22

25,000

to wr a single li of code. I

progr

rammers who competed to design and create softwa modules for TopCoder clients, a pr

o

o

are

rocess

that th popular pr

he

ress called cro

owdsourcing.1

Hu

ughes smiled at the projec success. T resulting software cod was bug-fre and operational

d

ct’s

The

de

ee

on its first day, a rarity in the s

s

r

software indu

ustry. Especi

ially impressive to Hughe was that in four

es

n

month 65 particip

hs,

pants from 11 countries in 6 continents had competed in 57 con

n

ntests to creat this

te

critica pricing sy

al

ystem for the client (see Exhibit 1). A of 2009, TopCoder ro

e

As

outinely prod

duced

softw

ware solutions for over 45 clients, inclu

s

uding AOL, Best Buy, Eli Lilly, ESPN GEICO, an the

i

N,

nd

Royal Bank of Scot

l

tland.

In the past eigh years, Hughes had refin TopCoder business m

ht

ned

r’s

model to acco

ommodate on

ngoing

ges in the so

oftware indu

ustry, while also pursuin its uniqu competitio

ng

ue

on-based sof

ftware

chang

development appr

roach. He ha transitione his business from a mo

ad

ed

odel that help other sof

ped

ftware

p

hat

d

tware through...